SEPARATE ACCOUNT TEN
of
INTEGRITY LIFE INSURANCE COMPANY
MANAGEMENT AGREEMENT
Agreement, made this ___ day of _________, 2000 between Separate
Account Ten (the SEPARATE ACCOUNT) of Integrity Life Insurance Company, an Ohio
corporation, and Touchstone Advisors, Inc., an Ohio corporation (the ADVISER).
W I T N E S S E T H
WHEREAS, the Separate Account is a managed separate account registered
under the Investment Company Act of 1940, as amended (the 1940 ACT); and
WHEREAS, the units of beneficial interest of the Separate Account are
divided into separate divisions or portfolios (each, a DIVISION), each of which
is established pursuant to a resolution of the Board of Managers of the Separate
Account, and the Board of Managers may from time to time terminate such
Divisions or establish and terminate additional Divisions; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the ADVISERS ACT); and
WHEREAS, the Separate Account desires to retain the Adviser to render
or contract to obtain as hereinafter provided investment advisory and
supervisory services to the Separate Account and the Separate Account also
desires to avail itself of the facilities available from the Adviser with
respect to the administration of the Separate Account's day to day business
affairs, and the Adviser is willing to render or contract for such investment
advisory, supervisory and administrative services;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF ADVISER. The Separate Account hereby appoints the
Adviser to act as manager of the Separate Account and administrator
of its business affairs for the period and on the terms set forth in
this Agreement. The Adviser accepts such appointment and agrees to
render the services herein described, for the compensation herein
provided. The Adviser is authorized to enter into one or more
sub-advisory agreements (each, a SUB-ADVISORY AGREEMENT) with a
registered investment adviser (each, a SUB-ADVISER) pursuant to
which the Adviser delegates to the Sub-Adviser its obligations for
providing investment advisory and certain other services in connection
with one or more of the Divisions; provided, that the Adviser, and not
the Separate Account, shall be responsible for any compensation payable
under any Sub-Advisory Agreement. Any such Sub-Advisory Agreement may
be entered into by the Adviser on such terms and in such manner as may
be permitted by the 1940 Act and the rules thereunder. For each
Division for which the Adviser has entered into a
Sub-Advisory Agreement, the Sub-Adviser shall have the primary
responsibility for providing investment advisory services as set forth
in Section 2 and shall be responsible for broker-dealer selection as
set forth in Section 3 and maintaining books and records as set forth
in Section 4, and the Adviser will have supervisory responsibility for
investment advisory services furnished by the Sub-Adviser pursuant to
the Sub-Advisory Agreement. The Adviser will review the performance of
the Sub-Adviser and make recommendations to the Board of Managers of
the Separate Account with respect to the retention and renewal of the
Sub-Advisory Agreement.
2. INVESTMENT ADVISORY SERVICES. Subject to the supervision of the
Separate Account's Board of Managers, and in compliance with each
Division's investment objectives and policies, the Adviser will provide
an investment program for each Division and determine the composition
of the assets of each Division, including determination of the
purchase, retention or sale of the securities, cash, and other
investments contained in such Division's holdings. The Adviser is
hereby authorized to execute and perform such services, or to arrange
for execution and performance of such services, on behalf of each
Division. To the extent, if any, permitted by the investment policies
of a Division, the Adviser shall make determinations as to and execute
and perform futures contracts and options on behalf of such Division.
The Adviser will provide the services under this Agreement in
accordance with each Division's investment objective or objectives,
policies, procedures and restrictions as stated in the Separate
Account's Registration Statement, as amended from time to time (the
REGISTRATION STATEMENT), filed with the Securities and Exchange
Commission (the SEC) and any other documents that set forth investment
policies, procedures or restrictions governing the Division.
The Adviser further agrees as follows:
(a) The Adviser will manage each Division so as to ensure
compliance by such Division with the diversification
requirements of Section 817(h) of the Internal
Revenue Code of 1986 and regulations issued
thereunder. In managing the Division in accordance
with these requirements, the Adviser shall be
entitled to receive and act upon advice of counsel.
(b) In undertaking its duties under this Agreement, the
Adviser will comply with the 1940 Act and all rules
and regulations thereunder, all other applicable
federal and state laws and regulations, with any
applicable procedures adopted by the Separate
Account's Board of Managers of which it has notice
and the provisions of the Registration Statement.
(c) On occasions when the Adviser deems the purchase or
sale of a security to be in the best interest of a
Division as well as of the Adviser's or the Adviser's
affiliates' other investment advisory clients, the
Adviser may, to the extent permitted by applicable
laws and regulations, but shall not be obligated to,
2
aggregate the securities to be so sold or purchased
with those of its other clients where such
aggregation is not inconsistent with the policies set
forth in the Registration Statement. In such event,
the Adviser will allocate the securities so purchased
or sold, as well as the expenses incurred in the
transaction, in a manner that is fair and equitable
in the Adviser's judgment in the exercise of the
Adviser's fiduciary obligations to the Separate
Account and to such other clients.
(d) In connection with the purchase and sale of
securities for each Division, the Adviser will
arrange for the transmission to the custodian,
transfer agent, dividend disbursing agent and
recordkeeping agent for the Separate Account (such
custodian and agent or agents hereinafter
collectively referred to as the AGENT), on a daily
basis, such confirmations, trade tickets (which shall
state industry classifications unless the Adviser has
previously furnished a list of classifications for
portfolio securities), and other documents and
information, including, but not limited to, Cusip or
other numbers that identify securities to be
purchased or sold on behalf of each Division as may
be reasonably necessary to enable the Agent to
perform their administrative and recordkeeping
responsibilities with respect to such Division. With
respect to portfolio securities to be purchased or
sold through the Depository Trust Company, the
Adviser will arrange for the automatic transmission
of the confirmation of such trades to the Separate
Account's Agent.
(e) The Adviser will monitor on a daily basis, by review
of daily pricing reports provided by the Agent to the
Adviser, the determination by the Agent for the
Separate Account of the valuation of portfolio
securities and other investments of each Division.
The Adviser shall not be obligated to independently
verify the Agent's pricing determinations, and the
Agent's responsibility for accurate pricing
determinations of the value of the Division's
securities shall not be reduced by the Adviser's duty
to monitor such determinations. The Adviser will
assist the Agent in determining or confirming,
consistent with the procedures and policies stated in
the Registration Statement, the value of any
portfolio securities or other assets of each Division
for which the Agent seeks assistance from or
identifies for review by the Adviser.
(f) The Adviser will make available to the Separate
Account, promptly upon request, all of each
Division's investment records and ledgers maintained
by the Adviser as are necessary to assist the
Separate Account to comply with requirements of the
1940 Act and the Advisers Act, as well as other
applicable laws. The Adviser will furnish to
regulatory authorities having the requisite authority
any information or reports in connection with its
services which may be requested in order to ascertain
whether the operations of the
3
Separate Account are being conducted in a manner
consistent with applicable laws and regulations.
(g) The Adviser will provide reports, which may be
prepared by the Agent, to the Separate Account's
Board of Managers for consideration at meetings of
the Board on the investment program for each Division
and the issuers and securities represented in each
Division's securities holdings, including a schedule
of the investments and other assets held in such
Division and a statement of all purchases and sales
for each Division since the last such statement, and
will furnish the Separate Account's Board of Managers
with periodic and special reports with respect to
each Division as the Managers may reasonably request,
including statistical information with respect to the
Division's securities.
3. BROKER-DEALER SELECTION. The Adviser is responsible for decisions to
buy or sell securities and other investments for each Division,
broker-dealer and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants'
rates. As a general matter, in executing portfolio transactions, the
Adviser may employ or deal with such broker-dealers or futures
commission merchants as may, in the Adviser's best judgment, provide
prompt and reliable execution of the transactions at favorable prices
and reasonable commission rates. In selecting such broker-dealers or
futures commission merchants, the Adviser shall consider all relevant
factors, including price (including the applicable brokerage
commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience
and financial stability of the broker-dealer or futures commission
merchant involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational facilities of
the firm involved, and, in the case of securities, the firm's risk in
positioning a block of securities. Subject to such policies as the
Board of Managers may determine and consistent with Section 28(e) of
the Securities Exchange Act of 1934, as amended (the 1934 ACT), the
Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by
reason of the Adviser's having caused a Division to pay a member of an
exchange, broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another
member of an exchange, broker or dealer would have charged for
effecting that transaction, if the Adviser determines in good faith
that such amount of commission was reasonable in relation to the value
of the brokerage and research services provided by such member of an
exchange, broker or dealer viewed in terms of either that particular
transaction or the Adviser's overall responsibilities with respect to
such Division and to the other clients as to which the Adviser
exercises investment discretion. In accordance with Section 11(a) of
the 1934 Act and Rule lla2-2('I') thereunder, and subject to any other
applicable laws and regulations including Section 17(e) of the 1940 Act
and Rule 17e-1 thereunder, the Adviser may engage its affiliates, or
any Sub-Adviser to the
4
Separate Account and its respective affiliates, as broker-dealers or
futures commission merchants to effect portfolio transactions in
securities and other investments for a Division.
4. BOOKS AND RECORDS. The Adviser shall keep the Separate Account's books
and records required to be maintained by it pursuant to this Agreement,
the 1940 Act or otherwise. The Adviser agrees that all records which it
maintains for the Separate Account are the property of the Separate
Account and it will surrender promptly to the Separate Account any such
records upon the Separate Account's request, provided however that the
Adviser may retain a copy of such records. The Adviser further agrees
to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Adviser
hereunder.
5. ADMINISTRATIVE AND SUPERVISORY SERVICES.
(a) The Adviser will coordinate all matters relating to the
functions of the Divisions' Sub-Adviser, if any, Agent,
accountants, attorneys, and other parties performing services
or operational functions for the Divisions.
(b) The Adviser will furnish without cost to the Separate Account,
or pay the cost of, such office space, office equipment and
office facilities as are adequate for the Separate Account's
needs.
(c) The Adviser will provide, without remuneration from or other
cost to the Separate Account, the services of a sufficient
number of individuals competent to perform all of the Separate
Account's executive, administrative and clerical functions as
are necessary to ensure compliance with federal securities
laws as well as other applicable laws and to provide effective
supervision and administration of the Divisions and which are
not performed by employees or other agents engaged by the
Separate Account or by the Adviser acting in some other
capacity pursuant to a separate agreement or arrangement with
the Separate Account. The Adviser shall authorize and permit
any of its directors, officers and employees who may be
elected as a member of the Board of Managers or officers of
the Separate Account to serve in the capacities in which they
are elected without any remuneration from the Separate
Account.
(d) The Adviser will assist in the preparation of all periodic
reports to the unitholders of the Separate Account and all
reports and filings required to maintain the registration and
qualification of the Separate Account's units, or to meet
other regulatory or tax requirements applicable to the
Separate Account, under federal and state securities and tax
laws.
5
(e) The Adviser shall assist in the preparation of and, after
approval by the Separate Account, file and arrange for the
distribution of proxy materials to Separate Account
unitholders as required by applicable law.
(f) The Adviser shall prepare, or cause the preparation of, and,
after approval by the Separate Account, arrange for the filing
of such registration statements and other documents with the
SEC and other federal and state regulatory authorities as may
be required by applicable law.
(g) The Adviser shall take such other action with respect to the
Divisions, after approval by the Separate Account, as may bc
required by applicable law, including without limitation the
rules and regulations of the SEC and of state securities or
insurance commissions and other regulatory agencies.
(h) The Adviser shall make its officers and employees available to
the Board of Managers and officers of the Separate Account and
Sub-Adviser for consultation and discussions regarding the
supervision and administration of the Divisions.
6. EXPENSES.
(a) During the term of this Agreement, the Adviser shall pay, or
cause a Sub-Adviser to pay, the following expenses:
(i) The salaries and expenses of all personnel of the
Separate Account and the Adviser except the fees and
expenses of members of the Board of Managers who are
not "interested persons" (within the meaning of the
0000 Xxx) of the Separate Account, the Adviser,
National Integrity Life Insurance Company ("National
Integrity"), or any Sub-Adviser;
(ii) All expenses reasonably incurred by the Adviser in
connection with providing the services described
above, including the provision of office space,
office equipment, office facilities, and executive,
administrative and clerical personnel in accordance
with paragraph 2(i) hereof, but excluding the
expenses described below to be assumed by the
Separate Account;
(iii) The fees of any Sub-Adviser pursuant to a
Sub-Advisory Agreement; and
(iv) The costs and expenses payable by any Sub-Adviser
pursuant to a Sub-Advisory Agreement.
(b) Each Division is responsible for and bears all expenses
incurred in its operation that are not specifically assumed by
the Adviser or ARM Securities Corp., the Separate Account's
distributor, pursuant to the Distribution Agreement with the
Separate
6
Account. General expenses of the Separate Account not readily
identifiable as belonging to one of the Divisions will be
allocated among the Divisions by or under the direction of the
Separate Account's Board of Managers in such manner as the
Board shall determine to be fair and equitable. Expenses borne
by each Division include, but are not limited to, the
following (or the Division's allocated share of the
following):
(i) The cost (including brokerage commissions, if any) of
securities purchased or sold by the Division and any
losses incurred in connection therewith;
(ii) Investment management fees due hereunder (but not
sub-advisory fees, which are payable by the Adviser);
(iii) Organizational expenses;
(iv) Filing fees and expenses relating to the registration
and qualification of the Separate Account or the
units of a Division under federal or state securities
laws and maintenance of such registrations and
qualifications;
(v) Fees and expenses payable to the members of the Board
of Managers who are not "interested persons" of the
Separate Account or the Adviser, National Integrity
or any Sub-Adviser;
(vi) Taxes (including any income or franchise taxes) and
governmental fees;
(vii) Costs of any liability, directors' and officers',
uncollectible items of deposit and other insurance
and fidelity bonds;
(viii) Legal, accounting and auditing expense;
(ix) Charges of custodians, transfer agents and other
agents;
(x) Expenses of setting in type and providing a
camera-ready copy of prospectuses and supplements
thereto, expenses of setting in type and printing or
otherwise reproducing statements of additional
information and supplements thereto and reports and
proxy materials for existing unitholders;
(xi) Any extraordinary expenses (including fees and
disbursements of counsel) incurred by the Separate
Account or Division;
(xii) Fees, voluntary assessments and other expenses
incurred in connection with membership in investment
company organizations; and
7
(xiii) Costs of meetings of unitholders.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, each Division will pay to the Adviser as
full compensation therefor a fee at an annual rate of .50% of the
average daily net assets of each Division. This fee will be deducted
from the assets of each respective Division and paid to the Adviser
monthly, but will be accrued daily for purposes of determining the
value of each Division on each day the New York Stock Exchange is open
for trading.
8. LIABILITY. Except as may otherwise be required by the 1940 Act and the
rules and regulations thereunder, the Adviser, any of its affiliated
persons and each person, if any, who, within the meaning of Section 15
of the Securities Act of 1933, as amended, controls the Adviser, shall
not be liable for, or subject to any damages, expenses, or losses in
connection with, any act or omission connected with or arising out of
any services rendered under this Agreement, except by reason of willful
misfeasance, bad faith or gross negligence on the part of the Adviser
in the performance of its duties or from reckless disregard of its
duties and obligations under this Agreement.
9. TERM. Unless sooner terminated, this Agreement shall continue in effect
for two years and thereafter for successive one year periods, provided
that such continuance is specifically approved at least annually in
conformity with the requirements of the 1940 Act; provided, however,
that this Agreement may be terminated by the Separate Account or any
Division thereof (with respect to such Division) at any time, without
the payment of any penalty, by the Board of Managers of the Separate
Account or by vote of a majority of the outstanding voting securities
(as defined in the 0000 Xxx) of a Division, or by the Adviser at any
time, without the payment of any penalty, upon not less than 60 days'
prior written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the 1940
Act).
10. NON-EXCLUSIVITY. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Adviser who may also
be a member of the Board of Managers, officer or employee of the
Separate Account to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of
any business, whether of a similar or dissimilar nature, nor limit or
restrict the right of the Adviser to engage in any other business or to
render services of any kind to any other corporation, firm, individual
or association.
11. AMENDMENTS. This Agreement may be amended by mutual consent in writing,
but the consent of the Separate Account must be obtained in conformity
with the requirements of the 1940 Act.
12. NOTICES. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or
mailed by registered mail, postage prepaid, (1) to
8
the Adviser at 000 Xxxx Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, Attention: President; or (2) to the Separate Account at 000 Xxxx
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
President.
13. CHOICE OF LAW. Except insofar as the 1940 Act or other federal laws and
regulations may be controlling, this Agreement shall be governed by,
and construed and enforced in accordance with, the internal laws of the
State of Ohio.
14. SEPARATE ACCOUNT. The Separate Account was established under Section
1701.54 of the Ohio General Corporation Law as of February 4, 1998. The
Separate Account may establish separate Divisions, and all debts,
liabilities, obligations and expenses of a particular Division shall be
enforceable only against the assets of that Division and not against
the assets of any other Division or of the Separate Account as a whole.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof whether oral or written.
16. COUNTERPARTS. This Agreement may be executed in counterparts, and each
counterpart shall for all purposes be deemed an original, and all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
SEPARATE ACCOUNT TEN OF
INTEGRITY LIFE INSURANCE
COMPANY
By
-------------------------
TOUCHSTONE ADVISORS, INC.
By
-------------------------
9
